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A few weeks ago, I read in the Washington Examiner (I read on the metro b/c it's quick and easy) that K&L Gates gave money to the campaign of Texas Lt. Governor David Dewhurst for US Senate. He's a moderate Republican, but you can't win in TX unless you're a Republican so it was almost like they gave money to a Texas Democrat (e.g. Dewhurst also took money from the Sierra Club). IMO he's the lesser of two evils b/c his opponent is a tea partier who's heavily involved w/ the Koch brothers and the Club for Growth. Just some info on the side...always helps to know where a future employer sends political contributions.

Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Anonymous User wrote:Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Except Dewey promised money to partners they never had and K&L carries no debt...

Anonymous User wrote:Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Except Dewey promised money to partners they never had and K&L carries no debt...

So is the similarity just that K&L might dissolve?

How sure are you K&L has no debt? If you are going by what was said earlier in this thread, keep in mind its almost a year old.

Anonymous User wrote:Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Except Dewey promised money to partners they never had and K&L carries no debt...

So is the similarity just that K&L might dissolve?

How sure are you K&L has no debt? If you are going by what was said earlier in this thread, keep in mind its almost a year old.

It's still the case. That has been Pete Kalis' main pitch for several years and still was this summer during all of his conferences. The firm claims that it will never take on long-term debt, so I think it will take something drastic to change the "no debt" angle.

Anonymous User wrote:Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Except Dewey promised money to partners they never had and K&L carries no debt...

So is the similarity just that K&L might dissolve?

How sure are you K&L has no debt? If you are going by what was said earlier in this thread, keep in mind its almost a year old.

SA this past summer. It was mentioned almost every day. Pretty annoying how hard they tried to say "We aren't like Dewey!"

Anonymous User wrote:Was talking to a litigation partner at a well-known DC firm recently about the economics of law firms and he said the following: "Well, I'm sure you know what happened to Dewey, and it looks like K&L Gates is next." I'm not sure if he has any inside info or is just working off the rumors that have been all over the legal press lately, so take that with a grain of salt.

Except Dewey promised money to partners they never had and K&L carries no debt...

So is the similarity just that K&L might dissolve?

How sure are you K&L has no debt? If you are going by what was said earlier in this thread, keep in mind its almost a year old.

It's still the case. That has been Pete Kalis' main pitch for several years and still was this summer during all of his conferences. The firm claims that it will never take on long-term debt, so I think it will take something drastic to change the "no debt" angle.

It's a shitty selling point. Most big law firms don't carry long term debt. It's also a non-distinguishing factor, as many failed firms didn't have long term debt. In fact, Dewey was the exception for having long term debt.

What makes law firms susceptible to failure is triggering default under a revolving credit facility provided by a bank. All firms have such facilities, since overhead payments almost always precede collections from clients.

I don't know if this has been covered, but I know they deferred their class to January again this year -- and I think they're alone in doing that. Not only is it a red flag about firm health, it also puts associates in a bad spot. If nothing else, you're looking at anywhere from 2-4 months of less pay versus another firm. I might be wrong, but I also think they didn't tell summers they would do that, so even if you're getting assurances now that they'll start on time, I would basically not believe them.

Anonymous User wrote:I don't know if this has been covered, but I know they deferred their class to January again this year -- and I think they're alone in doing that. Not only is it a red flag about firm health, it also puts associates in a bad spot. If nothing else, you're looking at anywhere from 2-4 months of less pay versus another firm. I might be wrong, but I also think they didn't tell summers they would do that, so even if you're getting assurances now that they'll start on time, I would basically not believe them.

I agree that it's a red flag, but they claim to have been doing it for the past 2-3 years because it's becoming the "norm" in biglaw (not that I necessarily agree, but that's their justification). The recruiting department at the office where I worked did inform us that it would most likely be a January start date, so it's not something that was sprung on people (at least at the office where I worked -- could have been different at others). I know that a few people got bumped up to September start dates this year due to need though, so take that for what it's worth. If I accept my offer, I'm going in with the expectation that it will be a January start.

Anonymous User wrote:I don't know if this has been covered, but I know they deferred their class to January again this year -- and I think they're alone in doing that. Not only is it a red flag about firm health, it also puts associates in a bad spot. If nothing else, you're looking at anywhere from 2-4 months of less pay versus another firm. I might be wrong, but I also think they didn't tell summers they would do that, so even if you're getting assurances now that they'll start on time, I would basically not believe them.

I agree that it's a red flag, but they claim to have been doing it for the past 2-3 years because it's becoming the "norm" in biglaw (not that I necessarily agree, but that's their justification). The recruiting department at the office where I worked did inform us that it would most likely be a January start date, so it's not something that was sprung on people (at least at the office where I worked -- could have been different at others). I know that a few people got bumped up to September start dates this year due to need though, so take that for what it's worth. If I accept my offer, I'm going in with the expectation that it will be a January start.

Them justifying it with bullshit is probably a bigger red flag. That they'd insult the intelligence of law students, who have access to all kinds of information on the web (let alone real, living, peers who have offers from other firms) with a self-serving lie says something about how they treat other aspects of their business. It's a personal decision though. I'd rather go to a firm that lies through its teeth about "lifestyle" and being "humane" than one that bullshits about finances & acts shady about start dates. And especially one that makes its first years start already behind on debt.

That said, K&L Gates is probably enough of a behemoth that it can survive based on inertia alone. Based on the stories quoted in ATL, they're fleecing their partners as they randomly expand around the world, which I guess may be more sustainable than innovative bonds and all those other Dewey shenanigans.

Anonymous User wrote:They love to harp on the no debt thing. I really have no idea how important or rare that is.

I was initially impressed with this, but have come to learn it's all a facade. Many of the large firms have no debt - GDC, Jones Day, K&L. In addition to being common, many of the firms simply finance through private-partner loans. Instead of the business entity taking on debt, equity partners will take a loans to expand. I am not sure how common the latter practice is, but I imagine it is quite common.

I know this was a long time ago, but this isn't always true. Some firms rely off of private partner loans for expansion. There are also some that are "debt-free" in the sense that they have retained earnings in the form of cash or other liquid or semi-liquid instrument which they use to expand. This is significant because partners aren't taking out loans to expand. They may be taking a bet on their equity surviving, but in essence that is actually a strong sign of financial health-- a huge cash supply.

Also, all firms, even the "debt-free" firms take on a loan at the beginning of the year to cover day-to-day and yearly expenses for months until they are in the black (as opposed to dipping into retained earnings from the previous year to take care of business issues). This isn't the same as being leveraged for expansion though-- this is simply a working capital facility that most every firm will have.

So, they most healthy firms may finance with cash to expand, and not carry any debt besides some type of working capital facility.